

jOj^ 



JK 791 
.N3 
1906 
Copy 1 



SUPERANNUATION 



IN THE 



CIVIL SERVICE. 



REPORT OF A SPECIAL COMMITTEE 



OF THE 



National Civil Service Reform League 



I90 6 



TV. Jr. Ncx/wcu 

"^^ Ja W 



■^'\^ 






Superannuation in the Civil Service. 



REPORT OF A SPECIAL COMMITTEE OF THE NATIONAL CIVIL 
SERVICE REFORM LEAGUE. 



(approved by the council of the league, SEPTEMBER, I906) 

There is a persistent agitation to provide old age pen- 
sions or retiring allowances for the superannuated among 
the civil employees of the United States. This demand 
is based on claims that the number of old employees is 
large, that they render but a small return for their 
salaries, that the number of them is increasing, and that 
the assumed growth in number is somehow due to the in- 
troduction of the merit system. Before discussing the 
merits of any of the various remedies so strongly urged 
by their advocates, let us examine into the alleged facts. 
To what extent does old age exist in the public service? 
Is it increasing? How far are the civil service rules 
responsible for such old age as there may be? What 
loss is caused to the government thereby, and what effect 
has the actual operation of the civil service law and 
rules on the increase or decrease in the number of super- 
annuated in government employ? 

As to there being any great amount of superannuation, 
it may be said that the retention of employees in the 
executive civil service of the United States is practically 
no longer than in the service of the great railroads. (i) 
Of the employees in the departments at Washington, on 
June 30, 1904, only 2 per cent, were over 70 years of 

(1) Comparison of length of service of employees in the U. S. 

Executive Service with that of employees of two large corpor- 
ations : — 

Length of Service U. S.* NYC&HRRR NYNH&HRR 
Over 20 years & less 

than 30 4.7% 4.7% 6.2% 

Over 30 years & less 

than 40 1.8 2.2 2.5 

40 years and over .2 .5 

Over 20 years 6.7% 6.9% 9.2% 

(From U. S. Civil Service Com., 21st Report, p. 29.) 



age. Outside of Washington, in the federal civil service, 
the per cent, was only 0.8 per cent., and in the whole 
executive civil service, 1.2 per cent. (^) 

As to the claim that the merit system is responsible 
for retaining in office even this number of superannuated 
or inefficient persons, it may be said that the merit system 
undoubtedly tends to prevent removals for political 
reasons, but it does not prevent, indeed it specifically pro- 
vides for, the removal of the incompetent on the propei 
record of the existence of incompetency. The fact that, 
in the early and middle part of the nineteenth century, 
before any civil service law was enacted, complaint was 
made that office-holders were retained beyond the period 
of their usefulness, indicates that this retention is not due 
to the merit system, but to a very natural reluctance on 
the part of heads of departments to dismiss the super- 
annuated who have rendered faithful service to the gov- 
ernment. Referring to the period 1809- 1829, Professor 
Fish speaks of "the retention of men whose usefulness 
has passed" as an acknowledged fact.(^) In Parton's 
"Life of Jackson," (Volume 3, page 211) is found the 
following, referring to 1829: — 

"Clerks, appointed by the early Presidents, had grown 
gray in the service of the government, and were so habitu- 
ated to the routine of their places that, if removed, they 
were beggared and helpless." 

The North American Review for October, 1867, 
says : — 

"If parts of the public offices thus degenerated into 
dormitories, other parts of them are nothing but asylums 
where the aged and infirm luxuriate, as far as their 
scanty salary permits, in a kind of official hospital of in- 
valids, constituting a formidable, though venerable, re- 
serve force of incapacities." 



(2) U. S. Civil Service Com., 21st Report, pp. 29-30. N. B. The 
22d Report has no data on the subject. 

(3) 'Thus the civil service became a pension fund for its dis- 
abled members. This policy would not have been so disastrous 
if the notion had not extended. Instances have been related al- 
ready where civil posts were bestowed to reward distinguished 
success in war or politics." — C. R. Fish — The Civil Service and 
the Patronage, Harvard Historical Studies, Vol. XL, p. 'jy. 



It is also interesting to note, with reference to the 
bearing of the civil service law upon superannuation, that 
in Washington, where the percentage of employees over 
70 is greatest, less than one-half entered the service 
through civil service examinations. Outside Washifigton, 
where the percentage of superannuation is so much less, 
nearly three-fourths entered through the civil service 
methods. 

Nor is it true that the number of employees over 70 
years .of age is rapidly increasing. In 1893, the first year 
for which we have official statistics, there were just 2 per 
cent, who were 70 years of age and over in the depart- 
ments at Washington ; there were 2 per cent, in 1900, 1.97 
per cent, in 1902 and 2 per cent, in 1904, at the end of 
eleven years. (■*) By the latest report made in May, 1906, 
the percentage is about 2^^/^ per cent. The average age in 
the service in Washington is 41.53 years, and outside, it is 
37.88 years. The average age, especially in the Washing- 
ton departments, is much increased at present by the 
large number of veterans of the Civil War, who have had 
special preferences in appointment. Their age in 1904 
was from 50 to 82 years. (^) Considerably more than 
half of those in the service over 65 years of age are 
veterans. (^) By far the greater part of those in the ser- 
vice over 70 years of age entered without examina- 
tion. Only 5.1 per cent, of those over 65 years of 
age entered through competitive examinations under civil 
service rules. C^) 

It has been sometimes said in reply, that the civil 
service law has been in operation but twenty-three years, 
that the average age of entrance is only twenty-eight, that 
it will be still some nineteen years before very many of 
those, who thus entered, are 70, and that from that time 
on superannuation will increase. As a matter of fact, 
those who enter by the civil service examinations do not, 

(4) 20th Report of the U. S. Civil Service Commission, p. 168. 

(u) 2ist Report of the U. S. Civil Service Commission, pp. 
29-30. 

(e) Special Report of the U. S. Civil Service Commission to 
the President, May 28, 1906. 934 veterans to 692 civilians over 
65 years of age. 

(7) Special Report of the tJ. S. Civil Service Commission to 
the President, May 28, 1906, p. i. 



4 

as a rule, remain long in the service. The appointees are 
picked persons, and after some half dozen years in the 
service, as they find promotion slow, and better opportu- 
nities in business life, official complaint is made that they 
resign in altogether too large numbers. (^) The resigna- 
tions alone, in the competitive service, for the year ending 
June 30, 1905, amounted to very nearly 6 per cent. This 
is four times the percentage of resignations from the 
service ten to twenty years ago. Then the yearly per- 
centage of resignations was about 1.5 per cent. (^) The 
deaths, resignations and removals for the year 1904-5 
were over 8 per cent.,(i'^) indicating enough separations 
from the service to change the whole personnel, on the 
average, in 12^ years. In the civil service of the Com- 
monwealth of Massachusetts,, where there has been, per- 
haps, the most permanent service, for the last sixty years, 
of any in the United States, there is practically no super- 
annuation in the parts subject to civil service rules. On 
the other hand, three conspicuous cases of mental inca- 
pacity from superannuation recently occurred in Massa- 
chusetts, but all three were in higher positions outside of 
civil service rules, two elective and one appointive on 
four-year terms. Re-election and re-appointment took 
place after incapacity was apparent, thus furnishing 
another illustration that superannuation exists outside 
of the operation of the civil service rules. There is, 
on the whole, every reason to believe that the amount of 
superannuation will decrease rather than increase as the 
veterans die off and the old persons, appointed as old 
persons, (most of them without civil service examina- 
tion) have departed. 

As to the government's loss from old age service, 
though 2 per cent, of the employees in the departments 
at Washington are over 70 years of age, it does not at all 
follow that they are all incompetent. According to a 
special report of the United States Civil Service Com- 
mission, made to the President of the United States, as 

(s) 22d Report, U. S. Civil Service Com., p. 177; also remarks 
of Secretary Bonaparte on the subject. 

(9) 14th Report, U. S. Civil Service Commission, p. 502. 

(10) 22d Report, U. S. Civil Service Com., pp. 248 & 253, com- 
paring Tables 20 & 25. Total deaths, resignations and removals, 
13,304; total average service for 1904-05, 162,950. 



to the efficiency of all United States civil employees at 
Washington, based on returns made from the depart- 
ments, it appears that those over 70 years of age do 
about three-quarters of the "maximum quantity" of-work 
"performed by a thoroughly efficient employee." The 
loss in salary actually paid, over what the salary would be 
if adjusted to work performed, is small. (^^) 

It therefore seems that there is a very small per- 
centage of superannuation in the public service, that 
there is very little loss to the government, that there 
is hardly any increase in the old age of the employees, 
that the civil service law, in its practical operation, does 
not tend to increase superannuation, that a very large 
proportion of such superannuation as exists is caused 
by the special preference given to the civil war veterans, 
and that the prospects are that there will be, in the 
end, less old age than there is at present in the depart- 
ments at Washington. 

The facts we have thus briefly summarized can easily 
be verified. They demonstrate that, so far as the public 
interest is concerned, there is no occasion for the enact- 
ment of any special measure whatsoever on the subject 
of superannuation. 

As far as we have been informed, the persons chiefly 
urging old age provisions are on the one hand those 
politicians who oppose the civil service law, and who 
are exaggerating the need of pensions as an argument 
against that law, or those who are misled by them, and, 
on the other, the older clerks, who, while* they have 
been extremely fair in their actual statements, undoubt- 
edly feel the need as applied to themselves, more than 
it would be felt as applied to the government service at 
large. 

On the mistaken assumption that there is already a 
large and growing amount of superannuation in the public 
service, and that some remedy must be promptly found, 
various measures have been proposed. These may be 
divided into two main classes (i) the outright civil 
pension list, (2) an old age pension fund based upon 
assessments of the salaries of government employees. 

(11) Special Report, U. S. Civil Service Commission to the 
President, p. 3. 



The outright civil pension list has secured but little 
support. In other countries it has been a source of great 
abuse. There is always a tendency to favor the employees 
at the expense of the government, and it is practically im- 
possible to cut down a system once put in operation. In 
so well governed a country as England, the civil pensions 
amount to i6 per cent, of the salaries paid for active 
service. If we should establish a civil pension list on 
the s.ame basis as the English, it would cost nineteen 
millions a year, even if limited in its application to 
those in the classified civil service, and if applied to the 
whole service, twenty-five millions. Either of these 
amounts is many times any possible loss to the govern- 
ment through the superannuation of its employees. This 
loss is about $400,000 in the departments at Washing- 
ton. (See Special Report of the United States Civil 
Service Commission.) There are nearly five times as 
many classified United States employees outside Wash- 
ington, but only two-fifths as large a per cent, are over 
70, therefore there are outside Washington twice as 
many over 70. On the same basis of efficiency, the loss 
outside Washington would be $800,000^ or, in t-he whole 
classified service of the United States,,^29OTpop. 1 <■ ,^ 

The other class of plans involves an ola 'a^^ pension \ p^ 
based on assessments of salaries ' of employees.' It ' i^^ ^ 
claimed that, in this way, a fund can be raised, without ^ 
cost to the government, which will take care of the 
superannuated. It would require but reasonable asssess- 
ments upon the salaries of those hereafter coming into 
the service to create a fund that would provide pensions 
for such of these employees as should reach the retiring 
age in the government service. Such plans have proved 
successful in operation. (^2-) g^i- none of the measures 
thus far proposed has been of this character. All have 
contemplated the immediate pensioning of all those 
already in the service who have reached the retiring age, 
or they have postponed the commencement of such pen- 
sions not more than three years from the enactment of 
the law. In general, any plan of uniform, or "flat rate" 
assessments, to begin practically at once to take care of the 



(12) See 20th Report U. S. Civil Service Com., pp. 156-165, for 
accounts of various plans of the kind. 



aged, is a great injustice to the younger employees. The 
old will receive support after they have paid but a few 
years, and can pay but a few years more, even if assess- 
ments are continued on the retirement receipts. The^young 
will have to pay a much larger sum from their salaries 
than would be required for their old age alone. If, by 
any chance, the fund should prove to be too small, that 
would transpire only many years hence, when those now 
ag'ed would have received their full allowances and 
passed from the stage. The others, the present younger 
employees, who would have borne the great brunt of ex- 
pensive assessments, would thus be the ones to suffer, 
unless the government made up the deficiency. 

The natural opposition of the younger men to the 
heavy assessments required by this plan is attempted to 
be met by holding out to them the prospect of earlier 
promotion, with a consequent increase of salary. Analysis 
shows that this prospect is somewhat illusory. The aver- 
age salary of government employees over sixty-five years 
of age in the classified service in Washington is only 
$1,213.76, and one-third of those over sixty-five years 
of age have salaries less than $1,000 a year. (i^) When 
we consider further that, in any event, those over sixty- 
five years of age will soon die or be obliged to retire, 
and that the many years' accumulation of old employees 
shows only 1.2 per cent, over seventy (i*), the actual net 
increase in salary to the younger employees through 
hastened promotion will not be very large, and will come 
to but few. 

In case the fund should ultimately prove to be insuf- 
ficient, the experience of England is instructive. There 

(13) See Special Report of the U. S. Civil Service Commission, 
p. 3. The average salary of all U. S. civil employees in the Dis- 
trict of Columbia is $1,071 (p. 139, 22d Report, U. S. Civil Serv- 
ice Com.), and the average salary of "clerks, copyists, steno- 
graphers and typewriters" is $1,241.87 (p. 149, 22d Report, U. S. 
Civil Service Com.). Not every vacancy in the higher grades is 
filled by promotion from the lower. For example, a doorkeeper 
is not usually fitted to be a clerk or copyist, still less a steno- 
grapher, while a clerk or copyist may not be fitted for an execu- 
tive position. In such cases, the vacancy is filled by original ap- 
pointment. 

(14) In the executive civil service of the United States through- 
out the country. See page 2 of this report, 



8 

the retiring fund, based on assessments, was started in 
1829. By 1857 it had been proved to be entirely inade- 
quate, and the government was practically forced to 
assume the burdens which the fund could not sustain. 
Thus began the English civil pension list. 

The plans thus far proposed for an old age pension 
fund created by assessments on the salaries of employees 
may be divided into two general classes, one by which 
there is, the other by which there is not, in case of death, 
resignation or removal, a refund of the assessment paid. 

Of the plans providing for such refund, the report of 
the United States Civil Service Retirement Association 
of March 9th, 1903, says : — 

"The reports of the actuaries * * * show that to 
retire the superannuated and disabled in accordance 
with any of the plans heretofore considered by the com- 
mittee, will require the assessment of a very large tax on 
the government employees, a tax so large, in fact, that it 
is considered by the committee inadvisable, even at the 
most favorable rates shown by the reports, to draft a 
measure based thereon." 

Page 6 of the report shows that the plans considered 
provided for refunds in case of separation from the 
service before the retiring age. The 20tli Report of the 
United States Civil Service Commission has considered 
the same subject and has made it entirely clear that the 
cost of any retirement scheme which provides for the 
return to the employee or his estate, of his assessments, 
upon separation before the retiring age is prohibitive, (i^) 

A typical bill of this sort is the Perkins Bill (U. S. 
Senate, No. 6194) introduced last May, an identical bill 
being at the same time introduced in the House of 
Representatives (No. 19,375). These bills have been 
officially approved by the United States Civil Service 
Retirement Association, and are receiving its support. 
The scheme provides for retirement pay after 70, and 
on incapacity before that age, and also for refund on 
separation from the service. To meet these requirements, 
an assessment of 5 per cent, on all salaries is provided. 



(15) See Table on page 173, and the "flat rate" estimates on 
page 176. The whole subject of superannuation is quite fully 
treated from page 156 to page 177. 



A report made by a retired Treasury official, now practic- 
ing law in Washington, estimates that this assessment 
is sufficient; but this estimate seems wholly inconsistent 
with the more reliable and complete calculations contained 
in the 20th Report of the United States Civil Service 
Commission. There (p. 176) it is estimated that a 
scheme very like that in the above bills requires an assess- 
ment of 12.6 per cent, on salaries. 

There are, to be sure, some diiferences in the Perkins 
Bill, yet, after all allowances, it seems impossible that 
the 5 per cent, assessments can be much more than 
half of what would be required. One chief difference is 
that, in the plan of the Civil Service Commission's 20th 
Report, the rate of assessment applies only to those now 
in the service, a lower rate being contemplated for those 
who enter hereafter. The Perkins Bill makes future 
emplo3'-ees contribute towards the extra expense of caring 
for the present old employees who have not been con- 
tributing in the past. Possibly the younger employees now 
in the service might assent to larger assessments than 
their fair share; but as to carrying the scheme forward 
with this extra burden, it seems to us to open a pitfall. 
Not only is this extra burden unfair to the new-comers, 
but it will tend to discourage their entering the govern- 
ment service, for, should this bill become a law, they 
will have to contribute more than they would if a new 
fund were being started for themselves and those coming 
after them. In order then, to be fair to the new-comers 
and to induce them to accept office, the government 
will surely be called on to reduce the assessments and 
make up the deficit, or to increase salaries sufficiently to 
cover the difference. 

But, apart from its expense, any retirement scheme 
which provides for refunds is very objectionable, because 
it puts a cash premium upon resignation and offers a 
great temptation to leave the service to those still young 
and capable enough to get outside employment, — the 
very ones the government would like to retain, but who 
would have many years to wait for an old age benefit. 
Take, for example, one entering the service at the age of 
twenty ; after fifteen years' of service, he would be thirty- 
five years of age, with thirty-five years still to wait for an 
annuity, and a bonus is offered him of three-quarters of 



his average year's salary (1*^) if he will resign and leave 
the service. On the other hand, those too old or incapable 
to get outside work, with but few years to wait before 
receiving an annuit}^, the least useful to the government, 
and the most burdensome to the fund, would stay on. 

If, however, no refund is made in case of death, 
resignation or removal before the retiring age is reached, 
the advantage is wholly with those who survive and 
remain in the service. It may well be asked, should 
a great, rich government like ours get rid of its super- 
annuated servants, free of expense to itself, and by a 
system which is so unfair to the estates of those who 
have died in its service? The claim that the dead man's 
widow and orphan should have at least what he has 
actually paid to the fund would be irresistible. The fund, 
with this extra burden, would soon prove too small, 
and the government would be called on to make up the 
deficit. That is the trouble with putting assessment 
funds in the hands of the government. Eventually, no 
matter what may be said at the outset, the government 
will be held morally responsible, if the fund fail to meet 
all original expectations. It is for this very reason 
that many of those favorinsf these assessment schemes are 
particularly desirous that "Uncle Sam" shall be made pay- 
master. 

As an illustration of how a plan may be put forth, 
apparently sufficient, and yet sure to fail, we may refer 
to the Brownlow Bill, introduced in Congress January 
21, TQo6,(^^) and the report on the same by a govern- 
ment official. (^^) The Brownlow Bill, besides levying a 
3 per cent, assessment, provides for a contribution to 
the retirement fund of 1-12 of the first year's salary in 
case of original appointment, and J4 of the first year's 
increase of salary in case of promotion. The resignation 
of an employee in the highest grade, it is claimed, will be 
followed by a series of promotions all along the line, and 
by one original appointment at the entrance. Thus each 
resignation increases the fund by special assessments for 

(id) This is on a 5% basis. If larger assessments are required, 
as seems probable, the bonus will be corresondingly larger. 
(17) 59th Congress, First Session, H. R. No. 13,658. 
(is) 59th Congress, First Session, S. Doc. No. 509. 



ir 







several promotions and one new appointment. In addi- 
tion to increasing the fund, each resignation, made before 
the age of 70, will take away one person who might, but 
for the resignation, have arrived at the age of 70 (the 
pension age), and so will postpone the call on the fund, 
since the average age of new appointees is only twenty- 
eight. Thus resignations work in two ways for the 
benefit of the fund. They diminish the number who 
would arrive at seventy, and they also increase the 
fund. 

The calculation made in the report above referred to 
as to the working of the scheme set forth in the bill 
assumes that resignations, deaths and removals will con- 
tinue at the large recent rate, namely 6 per cent. Re- 
movals and resignations make up the larger part of this 
6 per cent ; the deaths are only calculated at 5^ of i 
per cent. (See the Report.) But as to removals, is it 
at all probable that the present rate of removals will con- 
tinue when each removed employee will suffer, in addi- 
tion to the loss of his position, all his contributions to the 
pension fund? If, through kindness of heart, there are 
now too few removals, will they not be much fewer in 
number when removal will inflict so heavy a penalty? 
Where the government employee deposits each year a 
sensible proportion of his earnings with his employer, to 
build U]^ fund which shall protect him in his old age, 
will not the- kind hearted employer hesitate more than 
ever .to dismiss an employee from his service before he 
is entitled to the benefit? 

^As to resignations, is it not contrary to our knowledge 
<5t l^fnan nature to suppose that each assessment paid 
by an employee will not tend to make him more tena- 
cious of his position? What reasonable ground, then, 
is there for the assumption- in this report that, if the 
Brownlow Bill were law, government employees would 
continue to resign at the same rate as now? Certainly 
no one within ten years of the retiring age would resign. 
As a matter of fact, "few die and none resigns" under 
such a pension system. This is borne out by the experi- 
ence of the Police and Fire Departments in cities which 
provide pensions for policemen and firemen. In Boston, 
for instance, the resignations are at about 1-6 of the rate 
obtaining last year in the United States civil service. 



Deaths, resignations and removals, all taken together, 
in the Police and Fire Departments of Boston, are at 
about 1-3 of the rate recently obtaining in the United 
States civil service. (^^) If. under the operation of the 
Brownlow Bill, the percentage of deaths, resignations and 
removals should be at a rate sensibly less than the one 
assumed in the calculation of the report referred to, 
the provisions of the bill would prove inadequate by many 
millions of dollars. 

In passing, it might also be pointed out that clause 
2 of the Brownlow Bill provides for payments from the 
pension fund for those "totally disabled" ("not" as a 
"result of their own vicious habits"), though under 70 
years of age. The cost of this has been provided 
for only in a supposed surplus. Apart from any decrease 
in removals and resignations, this provision, ii carried 
out, might swamp the fund, unless the margin should 
turn out to be fully as large as calculated. It would 
at least jeopardize the "factor of safety." 

A final difficulty in any of these plans would be to 
determine its limits. Shall provision for superannua- 
tion apply to all branches of the service, or only to 
those which are under civil service rules ? If it applies to 
all branches, shall it include laborers? But if it applies 
only as far as the civil service rules apply, will not each 
extension of the rules involve a readjustment of rates as 
new classes of occupations with new risks are included, 
and in which assessments will not have been made prior 
to the extension ? 

As we pointed out at the beginning, the percentage of 
superannuation in the public service is so slight as to be, 
on the whole, negligible, and the tendency of the opera- 
tion of the civil service law and rules is rather to diminish 
than to increase the number of aged men in government 
employ ; but if any system of compulsory old age pro- 
vision is deemed necessary, the Australian system, adopted 

(19) Police and Fire Departments of Boston: — 

Total Number, , 2,115 

Number pensioned during year, 27 

died " " 17 

" discharged " " 12 

" resigned " " , 21 



13 

in Victoria in 1890, seems to have many advantages. 
There new appointees to the civil service are required to 
take out deferred annuity poHcies during the period of 
probation, as a prerequisite to final appointment.. The 
policies are made non-assignable and non-attachable. 

The cost of an annuity payable at seventy years of age 
and over, at 60 per cent, of the salary, to one entering at 
twenty-eight (the average age of entrance under the com- 
petitive system) is 2.7 per cent, of the salary a year. 
For example, it would require $27 a year to secure $600 
a year at and after seventy, or 2.."] per cent, of a $1,000 
salary. (20) 

These policies, as in Victoria, should be deposited with 
the government while the assured is in the government 
service, and on resignation or removal, he can take his 
policy with him and continue it, or exchange it for a 
paid-up policy pro rata. 

We learn from some of the large insurance compa- 
nies that they are willing to make sufficient deposits of 
good investments with the United States Treasury to 
secure these annuities, and that they would welcome 
federal supervision. If the assured wishes to add other 
features to his policy, such as payment at death, or in 
case of sickness or accident, he can do so at usual rates. 

In this system of private arrangement with companies, 
there is no chance of loss, no inadequacy of a fund which 
the government will be called on to make up, no danger 
of a pension lobby, and no tendency to make the office 
a property right. 

The objection that this plan does not care for the 
present old employees, and that it will not come into 
general operation for forty-two years or so, is the same 
objection that lies to any plan that does not contemplate 
commencing at once the payment of pensions. And this 
objection, if it be one, would be equally valid against 
every conservative method of providing old age funds, 
such as large private corporations have adopted. 

If the Australian plan be put in force, it would seem 



(20) It is possible that special rates below this may be obtained 
from the insurance companies, as they will be saved the expense 
of solicitation, which adds much to the cost of ordinary insur- 
ance. ■ ■ 



14 

advisable to leave the details of management with some 
board, such as one composed of the Civil Service Commis- 
sion and some selected government officials of large 
experience. The retiring age might be different for 
different employments. For example, in the railway mail 
service, a man might become superannuated long before 
he would cease to be a good bookkeeper. 

It is possible that the Australian plan might be put in 
operation by executive order. Under Section 1753 of the 
United States Revised Statutes : — 

"The President is authorized to prescribe such regula- 
tions for admission of persons into the civil service 
of the United States as may best promote the efficiency 
thereof and ascertain the fitness of each candidate 
in respect of age, health, character, knowledge and abil- 
ity," etc. 

A regulation requiring such insurance as a prere- 
quisite for admission into the service would certainly 
"promote the efficiency thereof" as the employees became 
old. 

As a temporary expedient, to cover the cases of those 
now in the service, a record of the amount of work done 
by all employees over 65 years of age might be kept, just 
as was done by the departments for the special report on 
efficiency before referred to, and then the pay be docked 
pro rata, in proportion as the work done has fallen off 
from "the maximum quantity performed by a thoroughly 
efficient employee." This would, theoretically at least, save 
all loss to the government. It may be objected that kind- 
ness of heart would induce those in charge to rate the work 
done by old men above its actual proportion. On the 
other hand, it would be much easier to dock pay than to 
turn the employee out altogether. 

Again, it may be truly said that attempts at employing 
inefficient labor at low rates have not proved profitable. 
But these have been attempts, as a rule, to employ pauper 
labor, while these employees have not by any means the 
defects attributable to that class of workers. They are 
well trained in official life and have acquired industrious 
habits. It is only partial, failure from old age that pre- 
vents their doing full work. Nor is it a case of importing 
new persons who are inefficient into the service, but only 
of using those who are alreadv there. In the cases of 



15 

some executive heads of bureaus, where youth and energy 
are required, it may be necessary to "demote" as well 
as cut salary, and this may be embarrassing in some 
cases. If it is too embarrassing to the employee, he can 
resign. If he needs the money sufficiently, he can sub- 
mit to that which is no disgrace, but only a recognition 
of failing powers. 

We may summarize our conclusions as follows : 

(1) The retention of employees in the civil service of 
the United States is no longer than in the service of the 
great railroads. 

(2) Only 1.2 per cent, of tlie employees in the ex- 
ecutive civil service throughout the country are over 
seventy years of age. 

(3) The number ot these is not increasing. 

(4) The tendency of the civil service law and rules is 
to decrease the number of old employees. 

(6) The separations are enough to change the Avliole 
service, on an average, once in 12 j4 years. By far (he 
greater part of the resignations are among the com- 
petitive appointees seeking better places ontside. 

(6) Only 5.1 per cent, of employees now in the ser- 
vice who are over 65 years of age entered through 
competition by examination. 

(7) Those over 70 do tliree-fourths of the maximum 
quantity of worlc performed by a thoroughly efficient 
employee. 

(8) The government's loss from inefficiency of its 
employees now over 65 years of age, expressed in 
salary, equals only $1,200,000 a year. 

(9) A civil pension list, on the English basis, would 
cost $19,000,000 a year for the classitied service alone. 

(10) Civil pension systems have been sonrces of great 
abuse elsewhere, and do not receive popular support in 
the United States. 

(11) Old age provisions,' based on funds raised by 
forced assessments of employees are dangerous. All 
those yet proposed are quite sure to be inadequate in 
the end, and if the Unlte<l States government is made 
the trustee, doubtless it will be compelled to make up 
the deficit, and will thus repeat the history of the 
English civil pension list. 



i6 

(12) Any pension system tends to make office a prop- 
erty right of tlie incumbent. 

(13) A pension based on assessment involves the two 
following dilemmas :— 

(a) Either it applies only to those entering the service 
hereafter, or to the present force as well. If tiie former 
plan is adopted, the government has no advantage over 
a mutual insurance company. If the latter, then the 
younger men of the civil service are unjustly burdened 
for the benefit of the older. 

(b) Either it involves a refund upon death, resigna- 
tion or removal from the service, or it does not. If the 
refund is made, the money required is obviously more 
than could be raised by any reasonable assessment. If 
none is made, an injustice is done to the families of 
those who may die before the age of retirement. 

(14) Thus all of the workable assessment plans in- 
volve either a simple system, which could as well be 
carried out by a mutual company, or considerable in- 
justice in their execution, an injustice whicii is sure to 
lead to demands upon Congress to subsidize the fund. 



We therefore recommend that, if any enforced pro- 
vision for superannuation be deemed advisable, it take 
the Australian form of a deferred annuity policy, which 
candidates for office shall be required to take out in 
some company before final appointment. As this would 
not apply to those who are at present in the service, we 
reconunend that a record be kept of the amount of 
work done by employees over sixty-five years of age, 
and that their salary be reduced in proportion to the 
amount by which their vrork falls short of that of a 
thoroughly efficient emplojee. This would be at once 
fair to the government, ^^id humane to the office- 
holders. 

Respectfully submitted, 

Horace E. Deming, 
Richard Henry Dana, 
Henry W. Farnam, 
Henry W. Hardon, 
Lucius B. Swift. 



LIBRARY OF CONGRESS 



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